China's central bank said Tuesday it would raise one-year deposit and lending rates by 25 basis points in its latest effort to curb rampant lending and bring inflation under control.
The People's Bank of China said the interest rate hikes -- the fourth since late last year -- would take effect Wednesday.
The latest move takes the one-year deposit and lending rates to 3.25 percent and 6.31 percent respectively.
In contrast, the Federal Reserve is unlikely to be in any rush to tighten US monetary policy. Bloomberg reports Tuesday's US economic news:
Service industries in the U.S. grew less than forecast in March, showing higher fuel costs are raising concern sales will cool.
The Institute for Supply Management’s index of non- manufacturing companies fell to 57.3 from 59.7 in February, lower than the 59.5 median forecast of economists surveyed by Bloomberg News. Readings greater than 50 signal growth...
While the Fed’s decision to continue their $600 billion bond-purchase program was unanimous, minutes of the March 15 meeting showed a few of the 10 voting members of the central bank’s policy-making committee thought evidence of a stronger recovery, higher inflation and rising inflation expectations “could make it appropriate to reduce the pace or overall size” of the plan. “Several others” said they “did not anticipate making adjustments,” the report showed.
Meanwhile, though, the UK saw an unexpected acceleration in service sector activity in March. Reuters reports:
The service sector activity unexpectedly logged its fastest pace of growth in over a year in March, a survey showed, pointing to a 0.8 percent expansion in the economy as a whole in the first three months of 2011.
The Markit/CIPS services PMI index, a measure of activity growth as reported by purchasing managers, surged to a 13-month high of 57.1 in March from an unrevised 52.6 in February, beating even the most optimistic analyst's forecast.
The euro area also saw an unexpected acceleration in service sector activity in March. Bloomberg reports:
Growth in Europe’s services and manufacturing industries accelerated more than initially estimated in March, led by Germany and France.
A composite index based on a survey of euro-area purchasing managers in the 17-nation euro region in both industries fell to 57.6 from 58.2 in February, London-based Markit Economics said today. That’s above an initial estimate of 57.5 released on March 24. A reading above 50 indicates growth.
A gauge of services advanced to 57.2 from 56.8 in February, Markit said. An indicator of manufacturing dropped to 57.5 from 59 the previous month, it said on April 1.
However, the euro area was also hit by some bad news on Tuesday. Bloomberg reports a fall in retail sales in February.
European retail sales unexpectedly declined in February as surging energy costs prompted consumers to cut back spending.
Sales in the 17-nation euro region slipped 0.1 percent from January, when they advanced 0.2 percent, the European Union’s statistics office in Luxembourg, Eurostat, said today. Economists forecast a 0.1 percent gain, the median of 18 estimates in a Bloomberg News survey showed. Sales rose 0.1 percent on the year.
And Portugal's credit rating has been downgraded again. Bloomberg reports:
Portugal’s credit rating was cut by Moody’s Investors Service for the second time in three weeks amid expectations it will be unable to avert a European bailout.
Moody’s downgraded Portugal’s long-term government bond ratings by one level to Baa1 from A3, and said it’s considering another reduction. Today’s move put the country at the same level as Ireland, Russia, Mexico and Thailand. Fitch Ratings on April 1 downgraded Portugal three notches to BBB-, the lowest investment grade, and kept the rating on “watch negative.”